A few inches changes the world.

Monthly Archives: June 2013

Both presidential campaigns have focused largely on the economy. There is no question we have a serious problem in this country, and throughout the world. The systems on which we could once rely, and in which many trusted, are failing. The reasons for the failures of different financial systems are varied and complex, but there does seem to be one underlying issue: there is just not enough money to go around. The main failures of the real estate system, investment banks, and more lead back to an attempt to create more funds out of thin air. Simply, there is just not enough.

Debt is at an all time high in the US. Sure, there is the possibility to loan more; both in short and long term loans and in credit and financing, but the need for supplementing an income with borrowed money is more pronounced now than it has been. For young people to live the same quality of life their parents did they need significantly more money (accounting for inflation) than the previous generation. The cost of living across the Nation continues to rise at a pace few salary increases are meeting. Rent increases in most areas about 5% a year while few who are employed get that much increase in their salary, if any, recently. Most salary increases are below that 5% increase, starting the disadvantage, and then you begin to add up everything else which is more expensive: food, utilities, phone and internet plans. Every aspect of a person’s life is costing them more, but their salary is not meeting those increases.

It is very hard for employees to hear that increases in pay can only be so much because of the economy, or before that, because of the time an employee had spent in a job or the state of the organization or any other excuse. It is hard to hear because we witness everything else increasing in cost to us; so someone is making money, because if everything costs more, that must mean businesses are pulling in more money, which should mean a paycheck could increase a measley 50.00 a week. But the bottom line doesn’t seem to take into account the continuation of a buying audience. Organizations are essentially causing their own failure by hobbling the buying public to show their boards and investors as limited costs as possible. If there is just simply not enough paycheck to afford it all, though, there won’t be purchases and it won’t matter how low the salaries of the employees, product won’t be moving, income won’t be coming in. And so the whole broken system propagates itself. People are not buying because they don’t have the money; organizations cut salaries to maintain some arbitrary bottom line.

Where is the profit going? We constantly hear about the earnings of various companies; how much money some people at the top have… The money is out there, somewhere. It cannot have just disappeared. But the distribution has drastically changed in the last 15 years. Following attempts to bring back Reaganomics; the system has relied upon a trickledown promise. The fairy tale being sold is that when those at the top are given the break to take in more money; they will then infuse the economy with their wealth. But the fact is that this infusion, even if it will go into the active economy and not into longterm investments, infuses only the bottom line of the next top dog. Trickledown does not actually trickle through the salaries of the lower classes. It trickles into the pockets of other fat cats and then back to the first one that “infused” the economy. Trickledown is really trickletrade.

There are many examples just in the US of the correlation between the health of the middle and lower classes and the health of the economy. When the middle class is at its healthiest and wealthiest, the whole economy profits. When the vast majority of citizens are fiscally sound; they build a sound economy. They infuse the economy on a scale those at the top cannot; there are simply exponentially more people to do so. But how do you convince those at the top, who have made a lifetime of being at the top, that moving that bottom line is not the demise of their business plan? How do you show them that once people can pay for something, they will, and ultimately, the profits gained will far outweigh that extra 50.00 a week? Until the economic culture changes, there seems to be no good way to convince anyone.